Wednesday 4 May 2011 19.05 EDT
First published on Wednesday 4 May 2011 19.05 EDT

Mayhem has become a daily ritual. Rocket launchers pound one town in Libya as a rescue ship relieves the wounded from another; the international criminal court is preparing to issue three warrants for war crimes to Colonel Gaddafi's regime; tanks are deploying in Syria; a president refuses to stand down in Yemen; a clampdown is in full swing in Bahrain; and dissent is welling just below the surface in Saudi Arabia and Jordan. All this now passes for another day in the life of the Middle East. And it is easy in this 24/7 drama to miss the one event with the capacity to change the scenery in a way more profound than Bin Laden's death.

Such an event took place in Cairo yesterday. Mahmoud Abbas, the Palestinian president, and Khaled Meshaal, the leader of Hamas, two men who dedicated much of their time in the last four years to undermining each other, met in Cairo to sign an agreement to form a national unity government. The Palestinian president announced the two were turning forever the black page of division. We shall see. The ceremony was delayed over whether the two leaders would appear on the podium together. (In the end they agreed to speak consecutively.) And as for the promise to release each other's prisoners, four more Hamas activists had been arrested in the West Bank only the day before.

The potential of such an accord should not be minimised. It does not lie in what it would do or not do to the peace process. This was killed in inaction long ago – and not by one Israeli government, but by several. Binyamin Netanyahu, the Israeli premier, may plead the collapse of the talks was not his fault, and he was presented with a free gift from Hamas, when its leader in Gaza, Ismail Haniyeh, mourned the death of Bin Laden as an Arab holy warrior. But even if you argue, as Mr Netanyahu does, that recognition of Israel's existence as a Jewish state is the core of the conflict, and not territory or settlements, what sunk the peace process has become an argument for historians, not politicians. There is no plan B, no realistic path of getting such talks back on track. Israel had the most moderate Palestinian leader in Mahmoud Abbas it was ever likely to meet over a negotiating table in several generations and blew it. He left empty handed. Had Mahmoud Abbas been given a serious and imminent possibility of signing an agreement that established a Palestinian state in the West Bank and Gaza, with its capital in Jerusalem, and one in which the Palestinian right of return had not been erased unilaterally from the reckoning, Mr Netanyahu might have had a case when he accused his counterpart of walking away from peace. In the end, there was no peace to walk away from. There was the status quo or as Mahmoud Abbas himself put it, the cheapest occupation in Israel's history. Israel's reaction to the Cairo agreement, the holding up of a $89m cash transfer to the Palestinian Authority only rubbed the point home that this status quo is unacceptable. This is, after all, their cash, not Israel's. The degree of dependency may vary, but every Palestinian ultimately lives as hostage to Israel's fiat. This is untenable and has been the daily reality of the so-called peace process. The only path left for Palestinians of all affiliations is to unite, reform and strengthen their leadership. This is what started to happen yesterday.

The Cairo accord could well turn out to be as fragile as the one signed in Mecca four years ago. It can still be undermined in a myriad of ways. But the clock itself cannot be so easily put back. The new factor which will not be changed is Egypt's re-emergence as a major player in the Middle East. No one expected a foreign policy to emerge before a domestic one, least of all before the government itself had been formed. But if Egypt succeeds in projecting its will as Turkey has done, it has the numbers to change the balance of power. It is wholly in the interests of the US and the EU to have a government in Cairo that will keep a peace accord with Israel but not be servile to its interests.